Monterey Peninsula Regional Water Authority

MINUTES MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA) Special Meeting 6:00 PM, Wednesday, September 12, 2012 COUNCIL CHAMBER FEW MEMORIAL HALL OF RECORDS CALL TO ORDER President Della Sala called the meeting to order at 6:00 p.m. ROLL CALL Directors Della Sala, Bachofner, Burnett, Edelen, Garcia, Alternate Director Carbone Present: Absent: Director Pendergrass Staff Present: PLEDGE OF ALLEGIANCE PUBLIC COMMENTS President Della Sala opened public comments on items not on the agenda. David Armanasco spoke in representation of Deep Water Desal presenting an update on the reporting progress and communication with the SPI Consultants. He indicated that on September 12, 2012 Deep Water Desal released a comprehensive preliminary study on the modeling of potential impacts from the operations of a desalination facility open intake, which was prepared by Tenera Environmental and will be moving forward with a validation study. Having no further requests to speak from the public, President Della Sala closed public comment. REPORTS FROM BOARD DIRECTORS AND STAFF President Della Sala reported that the County of Monterey voted unanimously to become a member of MPRWA and allocated $83,000 in funding to the MPRWA Joint Powers Authority, noting that at the September 27, 2012 meeting the MPRWA Board will vote on this item. Director Garcia reported that a letter was received from the Farm Bureau of Monterey supporting the appointment and participation of the County of Monterey with the MPRWA. 1. Receive Report from Technical Advisory Committee (TAC) - Stoldt a. Receive Preliminary Scoping and Constraints Evaluation Memorandum from SPI Consultants (Discussion) Action: Report Received and Discussed TAC Chair Dave Stoldt presented the agenda report, recommending all projects remain in consideration for cost comparison. Chair Stoldt indicated that Consultant Kris Helm will be at the September 17th, 2012 TAC meeting to report on preliminary conclusions about CEQA and permitting processes as well as conduct site visits to evaluate the projects sites. Chair Stoldt noted that the extension of the CPUC schedule will result in a more comprehensive analysis. Director Edelen requested that the consultant verify the information received from the various projects for accuracy.  MPRWA Minutes Wednesday, September 12, 2012 Director Garcia asked for an update on funding for SPI Consultants. On question, Director Edelen stated that funding had not been exhausted. Director Burnett asked if documents, such as the Consultants reports, were available for the public and Chair Stoldt stated the website has been updated and documents like these and others have been be made available on the website. President Della Sala opened the floor for public comment on the item. Tom Rowley representing the Monterey Peninsula Tax Payers Association expressed appreciation for the credible, unbiased work the consultants are doing and expressed concerns over the ruling of the Administrative Law Judge about the problems of California American Water (Cal Am) project's contingency plan, and thanked MPRWA members for their leadership. Nelson Vega requested that the consultants conduct their comparison of projects uniformly, clearly expressing the differences between each project based on cost. Mr. Vega suggested taking all successful parts of each project to create a new project. He also requested the Board be less concerned about the deadline and more concerned about providing a project at a reasonable cost to the public. Chair Stoldt stated he will request that SPI Consultants provide a matrix of major components, costs and a pro/con analysis of each project. Having no further requests to speak President Della Sala closed public comments. b. Consider Qualitative Risk Evaluation (Discussion) Action: Report Received and Discussed Chair Stoldt presented the agenda report prepared by TAC, which emphasized key categories of risk edited by all members of the TAC and that the TAC satisfied the requests of all 5 agencies. President Della Sala opened the item for comments from the Board. Director Garcia requested a description of ratings and results and Director Edelen questioned why risk factors were assigned differently to each project. Chair Stoldt responded with a brief description of key areas of concern. President Della Sala said these areas will be reviewed by TAC after the consultants have completed the final reports. President Della Sala opened the floor for public comment on this item. TAC Member Riley commented that the purpose of this review by TAC was to establish a set of categories to work from as an early warning system, identify possible areas of risk, and to ensure these categories are addressed before the projects are too far along in the process. Ralph Rubio asked if the two alternate projects under consideration clearly defined their desires for a governance structure. TAC Chair Stoldt responded that the two other projects have detailed their desires for a governance structure which would possibly entail a multi-jurisdictional Joint Powers Authority. Nelson Vega expressed concerns about the objectivity of the analysis, as well as expressed the need to address a water purchase agreement. Chair Stoldt responded that a water purchase agreement would be required. Tom Rowley spoke in support of the evaluation indicating TAC did a reasonable job with the information available. He encouraged the MPRWA to focus on three issues; technical feasibility, cost factors, and deliverability. Having no other requests to speak, President Della Sala closed public comment. Monterey Peninsula Regional Water Authority Special Meeting Minutes - Wednesday, September 12, 2012 2  MPRWA Minutes Wednesday, September 12, 2012 Director Garcia expressed concern that the information is dated and questioned if the SPI Consultants would be able update the risk assessment. Chair Stoldt noted that it was not part of the original agreement, but that they could discuss the addition to the scope of work. The MPRWA members indicated by general consensus to a disclaimer that this document was a snap shot in time to provide information and was not an adopted report. Director Edelen expressed appreciation to TAC for their report and requested SPI Consultants to communicate with TAC to understand how they came to their conclusions, then continue with an independent analysis. Director Bachofner supported Director Edelen's comments about knowledge transfer. 2. Consider Public Governance, Finance and Ownership of California American Water (Cal Am) Project (Discussion/Action/Direction) Action: Report Received, Discussed and Direction Given President Della Sala introduced the item and requested discussion, action and direction indicating there was a deadline for a written proposal to be received by the CPUC by October 1, 2012 TAC Chair Stoldt presented the agenda report specifying the opportunity to present to the CPUC a proposal addressing public governance of the Cal Am desalination project. A coordinated meeting between MPRWA, MPWMD, the County of Monterey, and Cal Am resulted in a draft framework for governance, acceptable to the Cal Am proposal but not to any parallel project or other public project that may be presented. Director Burnet clarified that this is an opportunity to present a proposal for public participation for the Cal Am project only, and this project has not been endorsed by the MPRWA. President Della Sala opened the floor for public comment on this item. TAC Member Riley encouraged the proposal be written to the needs of the MPRWA and the public and not be written for acceptance. Director Burnett agreed with Mr. Riley and suggested a re-ordering of the criteria listed in the draft proposal. Ralph Rubio spoke in support of George Riley's comments. Doug Wilhelm expressed a desire to not reveal all strategic positions at the beginning to put the MPRWA in a better negotiating stance. Nelson Vega voiced concerns about public governance over a private company. George Schroeder spoke to Mr. Vegas’ comments regarding representation of customers in the ownership and operation of the facility. President Della Sala reiterated the discussion today is due to the deadline for response to the CPUC and that the MPRWA has not endorsed one specific desalination project. Tom Rowley suggested requesting an extension from the CPUC Administrative Law Judge. Having no more requests to speak, President Della Sala brought discussion back to the Board. Director Edelen expressed concern over the timeline imposed by the CPUC and wants to ensure the MPRWA is giving proper weight to each project. Chair Stoldt said there are three opportunities to be heard by the CPUC, however the testimony phase (the October 1, 2012 deadline) is the most effective. Mr. Stoldt also stated that the Monterey Peninsula Regional Water Authority Special Meeting Minutes - Wednesday, September 12, 2012 3 MPRWA Minutes Wednesday, September 12, 2012 MPRWA has not supported the Cal Am project over any other project. Director Burnett added that the MPRWA previously submitted correspondence to the CPUC. They responded by requesting a more solid proposal and provide details of the desired governance structure. Vice President Bachofner and Director Burnett discussed the level of risk that each jurisdiction was willing to invest. Director Edelen expressed concern of potential decisions that could raise the total cost of the projects, and therefore subsequently the cost of water to the ratepayers, citing for example, the requirement for Leadership of Environmental Energy and Design (LEED) certification for buildings. President Della Sala called a recess at 7:55 p.m. and reconvened the meeting at 8:05 p.m. Director Bachofner suggested a reorganization of the draft proposal moving category B, items 1 and 6, having the most profound impact on the rate payers, be moved to category A. Also he stated moving category C, item 1, to category B. Listing categories A, B, & C in descending importance. The Board discussed the movement of items within the document. Director Burnett stated for the record that the MPRWA is not going to take the strategic lead on this item but will support that of the MPWMD. Director Edelen agreed, but specified that the City of Del Rey Oaks will not pledge any financial funds at this time. On a Motion by President Della Sala, seconded by Vice President Bachofner, and carried by the following vote, the MPRWA moved to direct Attorney Russell M. McGlothlin to submit the letter to the CPUC and Cal Am indicating that the MPRWA wishes to form a governance committee consisting of three public entities, MPRWA, MPRWD and Monterey County Water Resources Agency, which would be comprised of one elected member and one staff member from each agency; and to move forward with categories A, B and C, and the list of items under each of the respective categories with the exception of category B, item 1, which is the actual performance and adoption of value engineering recommendations and category B, item 6, which is the approval of major change orders over one million dollars; and that the MPRWA considers moving those to items from category B to category A subject to legal consideration of those items; and if after hearing the legal opinion, the ad hoc committee may decide to move the items. AYES: 6 DIRECTORS: Della Sala, Bachofner, Burnett, Edelen, Garcia, Carbone (Sand City Alternate) NOES: 0 DIRECTORS: None ABSENT: 1 DIRECTORS: Pendergrass ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None On a motion by Director Burnett, seconded by Vice President Bachofner and carried by the following vote, the MPRWA Board approved that the MPRWA work with the Monterey Peninsula Water Management District (the District) and assist in being a public partner in financial issues, and request that the CPUC direct Cal Am to accept the financing decisions of the District in terms of what will lead to the lowest cost financing. The decision would rest with the District and that they would go through the District and Cal Am would go through the 6 steps outlined in this memo. For example and not limiting to the item 3, change the “I.e.” to “for example, the Monterey Peninsula Water Management District”. Monterey Peninsula Regional Water Authority Special Meeting Minutes - Wednesday, September 12, 2012 4  MPRWA Minutes Wednesday, September 12, 2012 AYES: 6 DIRECTORS: Della Sala, Bachofner, Burnett, Edelen, Garcia, Carbone (Sand City Alternate) NOES: 0 DIRECTORS: None ABSENT: 1 DIRECTORS: Pendergrass ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None APPROVAL OF MINUTES 3. August 23, 2012 Vice President Bachofner requested item number 8, section B, be modified by the following; "Vice President Bachofner clarified Seaside was not urging the Authority to change its position immediately, but wants all other cities on the Monterey Peninsula to understand the City of Seaside advocates strongly for not just replacement of water in the future, but for growth water as well." Mr. Bachofner also requested under Public Comments, Bill Lude be changed to Bill Hood and requested the audio be reviewed to properly identify the public speaker listed as "Helm". Motion to Approve August 23, 2012 minutes as amended AYES: 5 DIRECTORS: Della Sala, Bachofner, Edelen, Garcia, Carbone (Sand City Alternate) NOES: 0 DIRECTORS: None ABSENT: 1 DIRECTORS: Pendergrass ABSTAIN: 1 DIRECTORS: Burnett RECUSED: 0 DIRECTORS: None PUBLIC COMMENTS President Della Sala opened public comments on items not on the agenda. Interim Executive Director Dunn presented a report that the Ad hoc committee gave direction on the selection of Legal Services and Executive Director position, but did not place the item on the agenda for approval because it was a special meeting and no action could be taken. Mr. Dunn requested the item be placed on the September 27th, 2012 agenda, however interviews would need to take place prior to that meeting and suggested the boards consider a special meeting to interview candidates. After discussion, the board agreed to agendize the selection of Legal Services by reviewing the top four recommended candidates from the ad hoc committee, in open session, as well as agendizing a discussion of the necessity of appointing an Executive Director. Director Edelen remarked Chair Stoldt is doing a fantastic job coordinating the TAC. ADJOURNMENT Having no further business to come before the board President Della Sala adjourned the meeting at 9:00 p.m. Monterey Peninsula Regional Water Authority Special Meeting Minutes - Wednesday, September 12, 2012 5 MPRWA Minutes Wednesday, September 12, 2012 ATTEST: Lesley Milton, Authority Clerk President, MPRWA Monterey Peninsula Regional Water Authority Special Meeting Minutes - Wednesday, September 12, 2012 6